Anthony Hilton: The City may give — but it can do better

Sir Howard Davies gave a talk called Why Do Some People Give Their Money Away And How Can We Stop Them Acting So Irrationally? (Picture: Glenn Copus) GLENN COPUS

Watching the fund-raising efforts for Children in Need at the weekend brought to mind a speech given in 2012 by Sir Howard Davies, recently in the news as head of the Airports Commission.

On that occasion, he was giving a talk to Pro Bono Economics under the typically mischievous title Why Do Some People Give Their Money Away And How Can We Stop Them Acting So Irrationally?

As Davies pointed out then, and as was confirmed at the weekend, the British are quite generous by European standards, donating about 0.8% of GDP annually to charity. This is about four times the proportion given in France or Germany but only about half in relative terms of what the Americans give.

That continuing gap is interesting because according to Michael Portillo, one-time cabinet colleague of the then Prime Minister Margaret Thatcher, it is much less than she had expected 30 years ago after she slashed the then top rate of income tax from 83% to 60% in one of her first budgets.

Thatcher wanted to see American levels of philanthropy in the UK, partly to offset her scaling-back of the role of the state. She thought slashing tax rates would stimulate a big increase in individual giving from bonus-rich bankers and the like. However, it did not happen then and still appears not to have happened to anything like the extent she anticipated.

This is not to say people in finance do not give. Every month in the City, there is some big fund-raiser or other, some of which bring notable levels of professionalism to what they do. The October Club, for example, brings the equity side of the City together once a year for a dinner and auction that has generated £9 million in the past 25 years and typically these days raises £500,000 a time.

According to a key supporter, the highly respected Paul Roy — once of Merrill Lynch and still running Newsmith out of Berkeley Square — what particularly marks it out is the effort the October Club organisers make each year to find a new charity for which its funding will make a real difference.

That is just one example but there is a lot more and it is becoming big business — so much so that Ben Morton-Wright, head of London-based fund-raising consultancy Global Philanthropic, strongly believes the capital is becoming the world centre for charitable giving.

His key point is that this is more than just the generosity of the Brits in television appeals or at special-occasion dinners. It is about the wealthy taking a conscious decision to direct some of their money back into the community, either as individuals or increasingly by setting up charitable foundations.

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Morton-Wright says London has an edge because it has all the fund management and private banking expertise the wealthy make use of in the normal course of things. When they come to think of philanthropy, they find the UK has solid charity law, reasonable levels of regulation and few restrictions on moving funds to anywhere in the world.

It helps, too, that so many of the wealthy have homes here, even if they use them only rarely, in that it gives them comfort that they can keep an eye on things. It is part of a package Morton-Wright says is persuading the wealthy from Asia, from the Middle East and Europe to make London the global base of their charitable activities and creating huge demand for one of the financial sector’s newest and fastest-growing areas of expertise.

The number of UK donors is increasing even if the sums contributed are flat. Figures compiled by the University of Canterbury and recently published in an annual survey by Coutts, the private bank, showed that the number of people giving more than £1 million rose from 192 in 2012 to 292 in 2013. A fifth of these gave £10 million or more. Worldwide, there were 1995 donations of over $1 million, and the total tracked by the survey went from $19 billion in 2012 to $26.3 billion in 2013. The UK share of this was $2.24 billion (£1.36 billion), or a little over 8%.

The gloomier news is that while the global amount raised has grown sharply, the UK has been flat for a number of years. Indeed, it seems to be stuck in a rut. As just noted, the sum raised in 2013 from 292 gifts was £1.36 billion.

But the year before, when there were 197 gifts, the total was a fraction less at £1.35 billion. In 2007 — a boom year — there was an even smaller number of big donors, 189, although the amount given was a little higher at £1.41 billion. The best year in the series was 2006 when 193 people gave £1.61 billion, the worst in 2010 when 232 people collectively gave £1.24 billion.There is one other thing to note. In the US and Russia, the bulk of giving comes direct from individuals. In the UK and Hong Kong, it is mostly channelled through foundations. In China, the Middle East and Singapore, it comes from companies.

It would appear that the more deep-rooted the mantra of shareholder value, the less willing company boards are to recognise their responsibilities to society at large and support wider charitable goals.

Perhaps that is a lesson for the UK. The Charities Aid Foundation, which monitors the giving of FTSE 100 companies, found their contributions increased from £1.3 billion in 2007 to £2.5 billion in 2012. But while 98 out of the 100 contributed something, about 60% of the donations came from just two sectors — healthcare and basic materials.

Sectors such as utilities and technology between them accounted for just over 1% of the total. They might ponder this when next they consider what they should be doing to rebuild trust in their business.